Recovering training costs when an employee leaves
The recent case of Geeks Ltd versus Watts demonstrates how careful you must be when seeking to recover training costs from a departing employee.
Mr Watts was employed as a trainee on £18,000 per annum. He signed two separate documents purportedly allowing Geeks to recover money if he left their employment within 30 months. He left after eight, for a better paid job elsewhere. Geeks pursued him for over £8000.
Somewhat surprisingly, a County Court judge agreed with Geeks. The matter then found its way to the Court of Appeal which, this time unsurprisingly, threw it out. I do not dwell here on the specifics of the ‘Geeks’ case.
Instead, here are a dozen important training fees issues for you to consider.
Getting the agreement right
- Keep training fees out of statutory written terms/contracts. It’s extremely difficult to argue that broad contract clauses signed on appointment are enforceable much later.
- Training fees agreements usually reflect the acquisition of a new skill, professional qualification, competence level, etc. Supply the document and get it signed before each training opportunity. Retrospectively signed ‘agreements’ are unenforceable.
- You must have contractual right to make deductions from pay. It’s also wise to legislate for potential civil recovery (whether or not you subsequently choose to pursue it).
Understanding what you can recover
- They should never relate to mandatory training that you must provide.
- They should never include repayment of wages. In the Geeks case, Watts was expected to repay 100 hours of wages as ‘study and practice’.
- The basis for deductions must be legitimate and reasonable. In the Geeks case, they proposed to deduct costs relating to a mentor (another employee) at £60 per hour. Geeks had to pay this employee anyway; and not £60 per hour!
- Charges must not be fanciful. Putting your own value on a piece of training and claiming it has a ‘market value’ of, say, £2500 against someone’s future employability is unwise. Training fees must reflect additional expense you specifically incurred.
- Do not include sums for which you were reimbursed. Training costs may be subsidised by a third party e.g. in an apprenticeship. You must have incurred all sums claimed.
Applying training repayment clauses fairly
- Use a reasonable period and a sliding recovery scale. Repayments exceeding two years are hard to enforce. As are ones not reducing over time. Geeks required a year’s employment before discounting started. Then it reduced by only 1/18th per month.
- The more junior the employee, the greater the potential scrutiny if deductions are challenged.
- Have regard to possible National Minimum Wage implications when making deductions.
- Never impose in anger, as a penalty for leaving. Always be objective and consistent.
Moorepay provides model training fees agreements for its HR clients to tailor around their own organisational needs.
